Negative macro-economic environment slows down Beirut Stock Exchange

(Banque du Liban et d’Outre Mer) – Local market continues to be dogged by a negative macro-economic environment and an uncertain regional political situation, with even the healthiest companies not es

(Banque du Liban et d’Outre Mer[1]) – Turnover on the local bourse received a boost from Lebanon Holdings indulging in a buy-back of its shares, thus accounting for 47.7 percent of total volume. At the same time, the BLOM Stock Index dropped back under 600 for the first time since May 29,weighed down by a drop in Solidere. Clearly, the local market continues to be dogged by a negative macro-economic environment and an uncertain regional political situation, with even the healthiest companies not escaping unscathed. Bank stocks, representing some of the strongest corporate entities in Lebanon, are a case in point. Although their business has undoubtedly suffered under current recession conditions, they remain profitable and in some cases continue to register relatively strong growth. However, until parliamentary elections are out of the way and the make-up of a new government is known, everything on the macro and market level is on hold.

The season of mid-year results was inaugurated by Bank of Beirut, which published its interim profits on Friday, up 0.37 percent on the same period last year at $9.52 million.The bank’s shares closed unchanged at $7.563 despite heavy volume of 84,523.Byblos “C” saw trade of 38,069 shares as heavy demand of 48,000-84,000 rescued its price from a drop to $1.813 to close flat at $1.875.BLC was the only mover among bank GDRs, slipping 0.33 percent to $7.65.On a more positive note, the announcement this week by Syria’s Prime Minister of a possible opening of the economy to foreign banks held hope of alternative growth opportunities for Lebanese banks in the future.

Both Solidere share classes fell to their lowest levels since the Israelis withdrew from the South at the end of May, with “A” going down by 6.78 percent to $6.875 and “B” by 9.68 percent to $7.The false dawn that was prompted by the liberation of the south was unfortunately all too predictable. That momentous event could not disguise the deeper faults lining the Lebanese economy, and could not possibly act as any kind of magic cure for a depressed real estate sector. At least Solidere’s GDR was able to recover from recent lows to regain a foothold above $6,as investors perhaps smelled a bargain.

Ciments Libanais was the subject of quite respectable turnover of 25,500 at an unchanged price, while Ciments Blancs saw 8,712 of its bearer shares changing hands.

The only fund listed on the BSE, Lebanon Holdings, continued a share buy-back program this week, intending to purchase 150,000 shares as part of an earlier plan to buy a total of 500,000 shares representing 10 percent of its capital. The company had bought 300,000 shares in May and another 164,970 shares this week, out of which 120,000 were exchanged during a block trade on Friday at a price of $5.563.